Mr. President, an interesting economic trend is sweeping through countries around the globe. It is one that started right here in the United States, and it would be wise for us to consider some of the amazing results that are being…
Mr. President, an interesting economic trend is sweeping through countries around the globe. It is one that started right here in the United States, and it would be wise for us to consider some of the amazing results that are being documented internationally.
More than 25 years ago, Ronald Reagan took the helm of an economy that was tanking quickly and bringing American families down with it. The economy was shrinking; inflation was in double digits; more than 7 million Americans were unemployed; and the prime interest rate was through the roof.
Ronald Reagan fought for an aggressive plan to rein in non-defense government spending, provide tax relief, and eliminate unnecessary government regulation. There were many critics who argued that Reagan's plan would create greater inflation. They cried that tax relief would be paid for out of entitlements and leave the elderly and needy worse off. However, John F. Kennedy's assertion that a rising tide lifts all boats was true.
As Reagan prepared to leave the presidency, spending was down, as were tax rates and inflation. Employment had climbed to record heights--there more jobs and better, higher paying jobs. Family income had been on the rise for 4 straight years. America's poor were able to climb out of poverty at the fastest rate in 10 years. It marked the longest economic peacetime expansion in history.
In his farewell address to the nation in 1989, Reagan stated: Common sense told us that when you put a big tax on something, the people will produce less of it. So, we cut the people's tax rates, and the people produced more than ever before. The economy bloomed like a plant that had been cut back and could now grow quicker and stronger.
Among the loudest critics of Reagan's philosophy of lower taxes and less government regulation were European countries that taxed high to offer more social services to their citizens.
The tide has changed all right. Countries around the world, including those in Europe, are racing to cut their taxes. France, Spain, Italy, Sweden,
Russia, Germany, Poland, Ireland, Austria, Slovakia, Hungary, Malaysia, New Zealand, Singapore, Taiwan, Vietnam, and Hong Kong.
They are cutting business taxes or capital gains taxes or turning to a flat tax in the name of economic growth. A study of 86 countries last year by KPMG International showed that tax cuts attracted business investment with minimal loss of old revenue. And that loss was offset by new revenue from increased hiring and spending.
Does that sound familiar? It is the economic plan that in the 1980s helped raise our Nation out of one of our worst economic situations and reach new, undiscovered heights. But instead of maintaining a tried and true economic path, the party in power is proposing to do just the opposite and raise taxes. The rest of the world is competing to lower their tax rates the fastest in order to attract businesses, jobs, investment, and wealth. But here, in the United States, Democrats want to spend more than $1 billion of the Social Security surplus, increase the national debt by $2 trillion, and raise taxes by an estimated $900 billion--the largest tax hike ever. And their plans contain no proposals to cut or eliminate wasteful spending.
In a Nation where we have always thrived when given the opportunity to grow, the Democrats' plan just doesn't make sense. We need to return to the principles of Ronald Reagan--we need to trust the American people with their hard-earned money. Let them keep more of it so that they can provide for their families, save and invest for their futures, and maybe even take a chance on a business they have been dreaming about.
We also need to give businesses the tools to compete in this very global economy. When countries around the world are lowering their tax rates to attract businesses, it puts us in a difficult position. Companies flock to the best environment, so higher tax rates clearly put American businesses that want to grow here at a disadvantage. It also puts our workers at a disadvantage when competing against workers all over the world.
Taxing, spending and stifling opportunity have never been the answers to our economic woes. Presently, our economy is healthy and strong because of tax relief that the Republican Congress provided.
But that is the past. The question now becomes, what are we going to do today? The corporate income tax rate in America is the second highest in the industrialized world. Instead of looking at ways to raise taxes, I believe this Congress should be looking at ways to make us more competitive by lowering taxes. That is the big challenge that is before us today: to keep the economy strong, to provide better- paying jobs to America. Do we raise taxes, or do we keep taxes low? Do we try to lower those taxes that are too high?
I believe the answer is simple. It has been proven by history. It has been proven by John F. Kennedy and has been proven by Ronald Reagan and has been proven by George W. Bush. We need to take those lessons of history, learn from them, and expand our economic opportunities, the opportunities for jobs in America.
I yield the floor.